• Broadcom dropped 11% in a single session despite beating earnings estimates— AI margin concerns triggered the selloff, not weak fundamentals.
• The Federal Reserve cut rates by 0.25% to a range of 4.25%–4.50%—its third consecutive cut this year—but signaled only two more cuts through 2025.
• Central banks bought over 1,045 tons of gold in 2024—the third straight year above 1,000 tons—as they shift away from dollar reserves.
• U.S. tariff rates have surged to levels not seen since the 1930s, which could shave roughly 1% off GDP through 2028.
• Market breadth is healthy: the Russell 2000 hit all-time highs, and equal-weight stocks beat cap-weighted indexes—a sign that gains are spreading beyond mega-caps.

David L. Berkowitz

Investor and Financial Advisor

Nearly 40 years of experience—from trading and research at a $250 million hedge fund in the early 1990s, to two decades as a portfolio manager, to teaching thousands of executives and employees how to create shareholder value through EVA and value-based management. Now helping individuals and families become shareholders through disciplined investing, concentrated portfolios, and direct stock ownership.

Record highs on Thursday. The worst tech selloff in six weeks on Friday. One earnings report from Broadcom wiped out billions in market value in a single session. Markets reminded us this week: prices don’t move in straight lines.

Here’s what happened and what it means for your money.

What Did the Major Indexes Do This Week?

The S&P 500 fell about half a percent for the week. The index is still up over 23% for 2024, according to Charles Schwab data—the second consecutive year with gains above 20%.

Small-cap stocks actually gained ground. The Russell 2000 rose over 1% and hit an all-time high midweek. Equal-weight stocks beat the big names too. That’s a healthy sign. It means gains are spreading beyond the largest companies.

Key insight: When small stocks and equal-weight indexes outperform cap-weighted indexes, market breadth is improving. This pattern is typically bullish for the overall market.

Where Did the Money Go?

Defensive sectors and cyclical value stocks led the way. Gold miners jumped nearly 6%. Gold itself is testing record highs.

Central banks around the world keep buying. According to the World Gold Council, central banks purchased 1,045 tons of gold in 2024. That’s the third consecutive year above 1,000 tons—far above the 473-ton annual average from 2010 to 2021.

Regional banks gained almost 4%. The Fed’s rate cut helps banks borrow money more cheaply. That’s good for their profits.

On the losing side, oil and gas stocks fell. Semiconductor companies (which make computer chips) dropped nearly 3%. Technology overall slid 2%. Friday’s selloff spread like a cold through the sector.

What Caused the Broadcom Selloff?

Broadcom fell nearly 11% on Friday alone—its worst single-day drop since January. Here’s the strange part: the company actually beat earnings estimates.

Broadcom reported quarterly revenue of $18 billion, up 28% from a year earlier. AI chip sales soared 74% to $6.4 billion. But comments about profit margin pressure spooked investors.

The concern: Broadcom is passing manufacturing costs for AI chips directly to customers without adding markup. That could squeeze profits even as revenue grows.

Key insight: Stock prices fell. Fundamentals didn’t. Broadcom doubled its AI chip revenue this year and expects it to double again next quarter. NVIDIA dropped 4% on no company news—pure spillover from the Broadcom selloff.

What Did the Federal Reserve Do?

The Federal Reserve cut interest rates again—its third cut in a row. Rates now range from 4.25% to 4.50%.

Here’s what the Fed does: It controls how expensive it is to borrow money. Lower rates mean cheaper mortgages, car loans, and business loans.

But Chair Jerome Powell sent a clear message. He said the Fed is “well positioned to wait and see.” Translation: don’t expect many more cuts. The Fed’s own projections show just two more cuts in 2025—half what markets had expected.

Why this matters: Interest rates affect everything from your savings account to how companies grow. Fewer cuts than expected pushed mortgage rates and Treasury yields higher, even as the Fed lowered its benchmark rate.

How Are Tariffs Affecting the Economy?

Tariffs remain a major story. According to the Tax Foundation, average U.S. import tariff rates could reach levels not seen since the Great Depression.

A tariff is a tax on goods imported from other countries. Higher tariffs mean higher costs on goods from Canada, China, and Europe. Companies either pass those costs to consumers or absorb them into their profits.

Economic models suggest tariffs could shave about 1% off GDP through 2028. Lululemon, for example, announced a $210 million hit to operating income from tariffs.

Which Individual Stocks Made Big Moves?

Winners:

Lululemon jumped nearly 10%. Earnings beat expectations. The CEO announced he’s stepping down, and the board approved a $1 billion stock buyback. A buyback is when a company uses cash to purchase its own shares. Fewer shares outstanding means each remaining share becomes more valuable.

JPMorgan rose nearly 6%. Banks love rate cuts because they can borrow money more cheaply.

General Motors gained over 6%. Rate cuts help auto financing. The stock hit its highest price since before the 2009 bankruptcy.

Losers:

AutoZone dropped almost 10%—fourth straight earnings miss. Tariffs hurt margins.

Broadcom fell nearly 8% for the week. Strong results, but margin concerns triggered selling.

NVIDIA dropped 4%. No company news. Pure contagion from the Broadcom selloff.

What Should Investors Watch Next Week?

November inflation data drops December 18th. Markets expect about 2.7% year over year. Any surprise could shift rate expectations.

Accenture reports earnings the same day. This tells us about corporate tech spending.

FedEx, Nike, and General Mills also report. Good reads on consumer and shipping demand heading into the holidays.

Three Things to Remember From This Week

• The Fed is patient, not pausing. Fewer rate cuts are coming than markets expected. Adjust your expectations.
• Chip selloffs don’t change AI demand. Broadcom fell 11% on Friday. But they doubled AI chip revenue this year. Expect it to double again next quarter—short-term noise.
• Market breadth is healthy. Small caps hit records—equal-weight beat cap-weight. Leadership is broadening. That’s typically bullish.

Weeks like this test discipline. Record highs, sharp selloffs. For owners of quality businesses, focus on the company, not the price. Let time compound.

Endnotes

1. CNBC Broadcom Selloff – Analysis of Broadcom’s 11% drop despite strong earningshttps://www.cnbc.com/2025/12/12/broadcom-tumbles-10percent-after-earnings-as-ai-trade-sells-off-.html
2. Federal Reserve Press Release – Official announcement of December 2024 rate cuthttps://www.federalreserve.gov/newsevents/pressreleases/monetary20241218a1.htm
3. World Gold Council – Central bank gold demand data for 2024https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2024/central-banks
4. Tax Foundation – Analysis of tariff rates compared to Great Depression levelshttps://taxfoundation.org/blog/trump-mckinley-tariffs-great-depression/
5. Charles Schwab – S&P 500 annual performance analysis for 2024https://www.schwab.com/learn/story/it-was-very-good-year
6. Tekedia – Analysis of Broadcom selloff and AI investment concernshttps://www.tekedia.com/broadcom-selloff-highlights-rising-ai-jitters-as-investors-question-how-long-the-boom-can-last/
7. Yahoo Finance – Broadcom margin pressure and AI chip profitability analysishttps://finance.yahoo.com/news/broadcom-stock-sinks-after-results-show-profit-pressures-adding-to-investor-fears-over-ai-payoff-185026280.html
8. CBS News – Federal Reserve third consecutive rate cut announcementhttps://www.cbsnews.com/news/federal-reserve-fed-meeting-interest-rate-cut-decision-december-2024/
9. CNBC Fed Decision – Fed projections for 2025 rate cutshttps://www.cnbc.com/2024/12/18/fed-rate-decision-december-2024-.html
10. CNN Business – Lululemon CEO departure and $1 billion buyback announcementhttps://www.cnn.com/2025/12/11/business/lululemon-athletica-ceo-to-step-down
11. J.P. Morgan – December 2024 FOMC meeting analysishttps://www.jpmorgan.com/insights/outlook/economic-outlook/fed-meeting-december-2024
12. CNBC Tariffs – U.S. tariff rates compared to Smoot-Hawley levelshttps://www.cnbc.com/2025/04/03/us-tariff-rates-under-trump-will-be-higher-than-the-smoot-hawley-levels-from-great-depression-era.html

David Berkowitz CIO

I’m Berk — Investor, Educator, and Owner. For 40 years I’ve helped families think like owners and invest in great companies. Earlier in my career I was head trader for a $250 million hedge fund, advised Fortune 500 boards and C-level executives and taught 10,000 of their employees at multi-billion-dollar companies, and trained non-financial employees in value-based management.

See Full Bio